The U.S. Department of Housing and Urban Development (HUD) recently announced a final rule to update and formalize the national standard for determining whether a housing practice violates the Fair Housing Act as the result of discriminatory effect.
To address post boom housing concerns, the rules now specifically address discrimination by loan servicers and others offering loan servicing and financial assistance.
A host of fair-housing and discrimination suits and complaints arose from the housing boom and bust, including steering minority buyers to subprime mortgages, when those borrowers qualified for prime loans; handling foreclosed properties and foreclosure rescue and relief services and more.
On April 11, 1968, President Lyndon Johnson signed the Civil Rights Act of 1968, which was meant as a follow-up to the Civil Rights Act of 1964.
The 1968 act expanded on previous acts and the act's Title VIII - the Fair Housing Act of 1968 - prohibited discrimination concerning the sale, rental, financing (and now loan servicing) of housing based on race, religion, national origin, sex, (and as amended) handicap and family status.
Discrimination 'alive and well'
That was nearly a half-century ago but, last spring, "Housing discrimination is all too alive and well in the United States today. In fact, the changing face of housing discrimination now tends to zero in more on immigrants, the disabled and families with children than in the past," said Ken McEldowney, executive director of Consumer Action (CA).
The statement was included in Consumer Action's "Housing Discrimination Survey" of 549 community-based organizations (CBOs) serving people with disabilities, immigrants, families with children, and other underserved consumers.
CBOs reported housing discrimination remains a widespread problem in the United States, with the majority of CBOs reporting cases of refused opportunities to rent or buy housing.
Seven out of 10 CBOs said that housing discrimination is a “very serious” or “somewhat serious” problem for the people they serve. Half of CBOs said housing discrimination is a “very serious” problem today.
Four times more CBOs have “seen housing discrimination go up in the last two years” than those who reported a drop during the same period, by a margin of 40 percent to 11 percent.
HUD's newest rule is designed to provide greater clarity and consistency for individuals, businesses, and government entities subject to the Fair Housing Act.
"HUD is maintaining well-established legal precedent and formalizing a nationally consistent, uniform burden-shifting test for determining whether a given housing practice has an unjustified discriminatory effect," said John Trasvina, HUD's Assistant Secretary for Fair Housing and Equal Opportunity.
Final fair housing rule
In part, the updated fair housing rule says:
Practices prohibited under this section in connection with a residential real estate-related transaction include, but are not limited to:
Failing or refusing to provide to any person information regarding the availability of loans or other financial assistance, application requirements, procedures or standards for the review and approval of loans or financial assistance, or providing information which is inaccurate or different from that provided others, because of race, color, religion, sex, handicap, familial status, or national origin.
Providing, failing to provide, or discouraging the receipt of loans or other financial assistance in a manner that discriminates in their denial rate or otherwise discriminates in their availability, because of race, color, religion, sex, handicap, familial status, or national origin.
Addressing bust-boom discrimination
The final rule also amends existing regulations to add the term "cost" to the list of potentially discriminatory terms or conditions of loans or other financial assistance.
In response to public comment, to address post-Great Recession cases of discrimination, the updated fair housing regulations also forbid discrimination in loan servicing and financial assistance practices.
The updated rule forbids "Servicing of loans or other financial assistance with respect to dwellings in a manner that discriminates, or servicing of loans or other financial assistance which are secured by residential real estate in a manner that discriminates, or providing such loans or financial assistance with other terms or conditions that discriminate, because of race, color, religion, sex, handicap, familial status, or national origin.”